CICC released a research report saying that it maintains the profit forecast of Li Auto-W (02015) and its “outperform industry” rating.
The bank believes it has a target price of HK$207, corresponding to 6.5xEV/Revenue in 2022, with upside of 65% and 69% respectively from the current share price.
The main views of CICC are as follows:
Li Auto ranks third in annual deliveries among Chinese EV giants
Data from Li Auto shows that the company delivered 14,087 units of Li ONE in December 2021, up 130.0% year-over-year, setting another new delivery record, surpassing November’s 602 units. A slight increase of 4.3% from the previous month, surpassing NIO’s December delivery (10,489 units) and second only to Xpeng (16,000 units).
In the fourth quarter, Li ONE delivered a total of 35,221 vehicles, ahead of NIO at 25,034 and behind of Xpeng at 41,751 units. The fourth quarter up 40.2% from the third quarter of 2021 and up 143.5% from the fourth quarter of 2020. 90,491 units delivered for the full year 2021, up 177.4% YoY.
improved supply chain and service networks
On the channel side, by the end of 2021, Li Auto has 206 retail centers, covering 102 cities, with an average of 2 retail centers per city; in addition, Li Auto has accelerated the layout of its after-sales service network, with 278 after-sales repair centers.
Throughout the year, the construction of the channel network showed a trend of accelerating quarter-on-quarter. The bank believes that the current investment in sales and management expenses can effectively drive the company’s sales and revenue to increase.
In addition, in 2022, Li Auto will start a new product cycle, and the pre-investment in the expansion period can consolidate its advantages.
The feedback of NOA intelligent driving is in line with the company’s expectations
On December 7, the Li OTA version 3.0 was officially launched and updated with NOA, visual parking and Li classmate features.
This NOA function for 2021 Li ONE models, realizes the adaptive cruise, navigation assisted driving and other functions. So far, the new Li ONE retains more than 60,000 vehicles, the number is in the domestic leading level, the bank believes that the rich actual road test data is expected to feed the Li algorithm ability to rapidly improve.
In addition, after the NOA function was officially installed on the car, from the actual use experience, the market feedback was in line with the company’s expectations.
The bank believes that with this NOA feature push, Li Auto is in the top tier of autonomous driving.
The new X01 may be delivered within this year.
In 2022, Li Auto will start a new product cycle, steadily moving from a large single product to diversification; the X01, an intelligent luxury SUV equipped with Nvidia Orin high-calculus chip and Lidar, is scheduled for mass production in 3Q22.
The bank expects that the new range extender developed in collaboration with Xinchen Power may be installed on the X01, driving the overall powertrain performance to continue to improve. In addition, based on the new X platform, the bank expects the X01 to feature a more experiential in-car intelligent cockpit.
The bank believes that Li Auto can patiently control the pace of product launches and adhere to the “explosive” strategy of large single products.
With the subsequent enrichment of product lines, Li Auto is expected to bloom in various market segments and long-term growth.
